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Boss refuses to reveal ‘cost gap’ of ‘unaffordable’ HS2

Mark Thurston, the boss of HS2 Ltd has refused to admit how far over budget the project is running, telling Construction News it “would not be appropriate” to disclose the exact scale of what he calls a “cost gap” that has to be bridged to make HS2 “an affordable scheme”. This follows reports that a single set of HS2 Phase 1 construction contracts, originally worth £6.6bn, have now ballooned to the £10bn mark, and that HS2 Ltd are even considering reducing the speed of trains to save money, with Thurston admitting that the true costs of HS2 were not understood before contractors were appointed.

Originally, it had been reported that £6.6bn worth of contracts for civils works for Phase 1, which consists of building bridges, tunnels and the like, but does not include the stations, tracks or ‘railway systems’ had jumped to £7.8bn, with a four-month delay in signing off designs becoming a seven-month delay because after ten years of planning, HS2 Ltd had never conducted surveys of the ground conditions along the route.

With some of these surveys still not complete and others have confirming the problematic conditions local residents had pointed out to HS2 Ltd years ago, the Sunday Times reported that the design sign off has now been delayed by a year and that the contract costs are now estimated to be £10bn.

In response to this report, HS2 Ltd CEO Mark Thurston confirmed to New Civil Engineer that contractors had not been able to make the progress they had hoped, because the ground investigations have showed construction would be more complex, and that only now after ten years of planning could he say that “designers now have a much better definition of the scope, cost and how long it’s going to take to build it.”

Continuing, he confirmed that HS2 in its’ current form is unaffordable and that “tough decisions” will have to be made to bring HS2 down to target cost, adding they would continue to work with contractors “until we get to a point where we have an affordable scheme”.

Whilst it is clear that HS2 cannot be built as to the proposed specification within the existing budget, Thurston is suggesting that instead of spending more money on HS2, the project must be descoped, leading to increased concerns along the proposed route that the first things to be cut would be mitigation, environmental protection and compensation. One method of descoping HS2 which Thurston has suggested is to cut narrower tunnels, which would have the knock on effect of meaning trains would have to run slower through them. However, such a move would only be likely to save tens of millions, opposed to potentially billions which need to be saved, to keep HS2 to the current budget.

Appearing at the Construction News Summit, Thurston said he could not comment publicly on reports of rising costs, whilst at the same time admitting that the true costs of contracts valued at £6.6bn were not fully understood when the contractors were appointed. However, Thurston refused to admit HS2 is running ‘over-budget’, instead preferring to use the term ‘cost-gap’, saying:

“There is a budget for HS2 and the company I run has been clear that it has to deliver the railway for that number. I don’t subscribe to the idea that it is over budget. When you think of when the budget was set for phase one in particular, which was in 2015, we always maintained that until we put contractors into play, we would not understand the true cost. We are sitting with our contractors as we speak to close that gap and I won’t comment on the size of that gap. The Department for Transport is very clear as the sponsor of the scheme that there is a budget for High Speed 2: that’s how much money we’ve got. There’s no more money, we’ve got to come together as an industry to make HS2 affordable.”

Stop HS2 Campaign Manager Joe Rukin responded:

“We are now at the point where the CEO of HS2 Ltd is seriously defending the fact HS2 has gone over-budget yet again, by claiming they had always made it clear that the £6.6bn price they put on the civils contracts was a guess. Mark Thurston seems to be in complete denial, as on top of that he’s decided to rebrand going over budget yet again as having a ‘cost gap’, and in saying it ‘would not be appropriate’ to admit just how far away off budget they now are, he seems to have forgotten that he is a civil servant and this is public money.”

“The real reason for refusing to say just how far over budget HS2 is this time, is that it’s going to be a massive number that will be another nail in the coffin of the project and will just demonstrate the incompetence of the people running this fiasco. It was clear from the start that HS2 was never going to be affordable, and whilst the choice now is being billed as cutting the project specifications or taking another hit on the budget, the only real choice for Government is to scrap HS2 before it is too late.”

QAsked by Tulip Siddiq(Hampstead and Kilburn)[N]Asked on: 28 November 2018 Department for TransportHigh Speed 2 Railway Line196823 To ask the Secretary of State for Transport, what his latest estimate is of the total cost of High Speed Two; and how much of that funding has been spent. AAnswered by: Ms Nusrat GhaniAnswered on: 03 December 2018 The total funding envelope of the High Speed 2 project was set at £55.7bn (2015 prices) as part of the 2015 Spending Review settlement. The total spend to date is £5.5bn (nominal), inclusive of the financial years 2009-10 to 2017-18.